It started with one user at first and then started to spread to a number of users on the same instance.

The
weird thing about it was the initial extent of segment 10 was
128. The next size was 1M with the optimal size being 5M.

I think its already been suggested that you keep initial=next for
rollback segments. This is good advice, especially for RBS - though
actually for other segment types as well.

It
appeared that it was even having troubles with the initial
extent. I guess that is why I labeled it
'urgent'. I wasn't sure why it couldn't even create the
initial extent. The free space still does not appear to be
giving itself back to the instance....

the 128 in the 1650 error text is blocks not bytes. Most
likely you have an 8k block size and its a 1m extent that can't be
created.